The Lehigh County Authority and eight private bidders from as far away as Australia want a shot at taking over Allentown's water and sewer business. Competitors hoping to lease the city's water and sewer systems for up to 50 years were asked to submit their qualifications to the city by Thursday of last week. Officials plan to vet the list of potential operators, which also includes water companies and private equity firms, to come up with a field of well-qualified eligible bidders.

Bethlehem Mayor Robert Donchez has launched a review into the city's hiring of a private company that is partly owned by city business administrator David Brong. The business, Barnsdale Associates, this spring accepted the city's clean fill, excavated from water and sewer projects. The purchase order was flagged by city Controller David DiGiacinto before any checks were cut. While Brong said he knew nothing about the $15,000 blanket purchase order, Mayor Robert Donchez called it "unacceptable" for any department head to be involved with a private business that does work for the city.

The Bethlehem Authority on Thursday decided to pump $1.4 million into paying down the city's massive water debt over the next two years and to decrease the interest rate the city pays on the debt. Authority officials said the move is important considering the serious financial challenges facing the city's water business, which carries a $133 million debt. "This is a very prudent approach," authority Chairman Ronald Donchez said. The money comes from the authority's refinancing of $20 million in debt, which helped pay for part of a dam reconstruction nearly a decade ago. The refinancing included a variable interest rate for part of the loan.

Bethlehem Councilman David DiGiacinto announced Monday he will run for city controller instead of a second term on council. After working more than three decades in the corporate world and serving as an elected or appointed official since 2003, DiGiacinto said his business skills and government knowledge would make him a good financial watchdog for the city. "Managing any business requires you to lead people, read, understand, and negotiate agreements, provide for debt financing, audit expenses, review and approve capital expenditures, and deal with the appropriate regulatory agencies," DiGiacinto said.

Bethlehem City Council members on Tuesday took their first look at a long-range plan that will map out the future of the city's ailing water business. The strategic plan, which began two years ago as a campaign promise of Mayor John Callahan, proposes initiatives such as expanding customers in outlying municipalities, possibly increasing the water and sewer rates, updating city water equipment and paying down debt. Councilman Gordon Mowrer applauded the report, saying that he wished it were done a decade ago. "We're going to be watching for results," Mowrer told the administration.

PPL Corp.'s U.K. joint venture said it won't split off Hyder Plc's regulated water business to a not-for-profit enterprise as a condition for bidding for the Welsh utility. "This pre-condition has been waived," the company said in a statement. The joint venture with Southern Co. is known as Western Power Distribution. Western Power said it's amending an April 30 announcement that it approached Hyder about an all-cash bid to compete with Nomura Securities Co.'s $3.5 billion cash and debt offer, made last month.

Vaughn C. Gower, the chief financial officer of Lehigh Valley Hospital, has been nominated to the Bethlehem Authority, which oversees the finances of the city's beleaguered water system. Gower possesses the financial expertise and fresh perspective needed to get the water business back on track, Mayor John Callahan said. "He is the CFO of the largest employer in the Lehigh Valley, and he lives in Bethlehem," Callahan said. "We would be hard-pressed to find a candidate as qualified as him."

Joseph Uliana, a former state senator and a Harrisburg lobbyist, has decided not to seek reappointment to the Bethlehem Authority, the financial arm of the city's $16.5 million-a-year water business. "We had our third child in December, and my responsibility [at work] continues to grow and grow," said Uliana, whose term expired at the end of January. "I loved serving on the board, but I have to give up something." His departure from the authority means the five-member board is down two members, forcing the remaining three members to attend every board meeting to meet a quorum until replacements are named.

Bethlehem Mayor John Callahan's administration has come out in support of an environmental rating that would protect the pureness of the city's water supply in the Poconos. The so-called exceptional value rating -- the state's highest protection designation -- "would ensure the ongoing supply of very high quality drinking water to our customers," according to the administration's letter to state Environmental Protection Secretary Kathleen McGinty. After hearing from experts, Mayor John Callahan said the new rating would not interfere with the city's water business or the logging venture that the Bethlehem Authority plans to launch this fall on its watershed in Monroe County.

Pocono Raceway is now in competition with the Wildlands Conservancy to buy 522 acres from Bethlehem's water authority. While the conservancy has been open about its interest, bids opened Wednesday gave officials their first news of the race track's plans. The land, north of Interstate 80 in Monroe County, is prized for its plant and wildlife, but is not needed for the Bethlehem Authority's water business. The proceeds from sale of the land, appraised at $1.9 million, would help shore up the ailing water authority's finances.

The Lehigh County Authority and eight private bidders from as far away as Australia want a shot at taking over Allentown's water and sewer business. Competitors hoping to lease the city's water and sewer systems for up to 50 years were asked to submit their qualifications to the city by Thursday of last week. Officials plan to vet the list of potential operators, which also includes water companies and private equity firms, to come up with a field of well-qualified eligible bidders.

Bethlehem is exploring whether it should shed its water and sewage utilities by selling or leasing the operations to an independent authority. The study, to be completed by the end of the year, is examining how such a deal could help the utilities better manage their debt and compete in the sewer and water business as the Lehigh Valley grows. "This is not something that we would do overnight. It's something that would need a lot of public vetting," said David Brong, city director of water and sewer resources.

By Matt Assad and Nicole Radzievich", Of The Morning Call | July 17, 2012

Allentown's skyrocketing pension costs have become so severe that the city is considering privatizing its water and sewer plants to raise more than $100 million, according to city sources. With its pension payment expected to balloon to more than $23 million by 2015, the city is considering a long-term lease that would turn its water and sewer operations over to an outside authority or company in return for an estimated $100 million to $250 million. The infusion of cash would be pumped into the city's underfunded pensions, lowering its annual payment by as much as 80 percent and staving off a pension crisis.

In Bethlehem's quest to find more customers to buy its bountiful water supply in the Poconos, Mayor John Callahan announced Wednesday the city will petition a state agency to serve more parts of Bethlehem and Allen townships. The expansion would allow the city to supply water to the future St. Luke's Hospital campus and a large residential development near Route 33's exits into Bethlehem Township. In Allen Township, it would mean providing city water for people with failing wells in the Kreidersville village and in a future housing development.

Bethlehem owns spring-fed reservoirs teeming with more water than its residents can drink and its industries use. What the city really needs, and has since Bethlehem Steel went cold in 1995, are customers. The potential for those lies in the growing suburban townships just beyond the city's borders. Those townships, however, are already served by another supplier, Easton Suburban Water Authority, which is planning a $21.8 million plant expansion to serve growing areas like the Route 33 corridor.

The Bethlehem Authority picked the Wildlands Conservancy over Pocono Raceway on Thursday in a bidding war for 522 acres of surplus watershed land in Monroe County. But it was the authority's comfort with the prospective buyer and not money that determined the outcome. The agreed-upon sale price is $1.65 million, about $275,000 less than the land's appraised value. However, the appraisal completed last summer did not take into account deed restrictions that the authority would seek in completing the sale -- namely that development would be restricted, said James L. Broughal, the authority's solicitor.

Unlike prior years, Bethlehem officials said Tuesday, the city has a good chance to receive approval next year for a water rate hike, one of two dozen initiatives unveiled last month to fix the city's ailing water business. David Brong, city Water and Sewer Resources director, declined to specify the percentage increase the city will request in July before the state Public Utility Commission, but said the city's PUC consultant indicates the conditions are ripe for the increase. The city's month-old analysis of the water fund's spiraling debt -- which now amounts to $141 million -- is a big justification, Brong said.

The owner of the Pocono Raceway said Monday he wants to buy 522 acres from Bethlehem's water authority to preserve the land and protect the 1,500 acres the raceway owns nearby. Dr. Joseph Mattioli, chairman and chief executive officer of the raceway, said he has no intentions of developing the environmentally prized land if the authority sells it to him. The stream and woodlands on the property, which straddles Interstate 80, would be attractive for private hunting or fishing, Mattioli said.

Pocono Raceway is now in competition with the Wildlands Conservancy to buy 522 acres from Bethlehem's water authority. While the conservancy has been open about its interest, bids opened Wednesday gave officials their first news of the race track's plans. The land, north of Interstate 80 in Monroe County, is prized for its plant and wildlife, but is not needed for the Bethlehem Authority's water business. The proceeds from sale of the land, appraised at $1.9 million, would help shore up the ailing water authority's finances.